The logo of U.S. technology giant Microsoft is installed on the wall of Nokia's former headquarters in Espoo, Finland, in April. / Mikko Stig, AP

by Jon Swartz, USA TODAY

by Jon Swartz, USA TODAY

Even by Silicon Valley's outsized standards, this week has been head-spinning. Longtime frenemies Apple and IBM announce a business partnership. Yahoo continues its advertising struggles, leading to whispers of layoffs. PC sales stabilize, ushering in surprisingly impressive financial results for Intel.

But for sheer jaw-dropping effect, nothing comes close to Microsoft's plans to eliminate up to 18,000 jobs amid the apparent gutting of Nokia, the smartphone maker Microsoft acquired for $7.2 billion.

Some two-thirds of the cuts - three times the size of Microsoft's largest previous layoff - come from Nokia. Later Thursday, Microsoft said it was shutting down Xbox Entertainment Studios, a division that helped create original entertainment programming for the Xbox. Overall, Microsoft employs 125,000.

Microsoft CEO Satya Nadella "was not a fan" of the Nokia purchase, says Mike Feibus, a technology analyst who closely follows Microsoft. Nokia was part of (former CEO Steve) Ballmer's "devices and services" mission, which Nadella is moving away from, he says.

Nadella has said he doesn't want to compete with big hardware companies that make PCs based on Windows, Microsoft's recently announced Surface Pro 3 tablet aside, Feibus says.

"Seriously, the only Microsoft-owned hardware he's openly supported is Xbox."

The software giant, which is undergoing a wrenching shift to mobile and cloud computing, plans to scotch Nokia's brief foray into Android-based phones, announced in February. The acquisition of Nokia's handset business added 25,000 people to Microsoft's payroll.

"We plan to shift select Nokia X product designs to become Lumia products running Windows," Nadella wrote in his memo announcing the job cuts. To underscore its point, Microsoft said it doesn't plan to make future Android-based Nokia X phones.

Nokia was the most logical choice to absorb the brunt of cuts. Redundancy existed with jobs, and Microsoft "likes to keep things local" in Redmond, Wash., says Forrester analyst J.P. Gownder. (Nokia is headquartered near Helsinki.)

Mobile is crucial to Nadella's transformation plan, so Nokia should not be discounted. It will just have to do with a fraction of its workforce.

Microsoft stock is up more than 20% since Nadella took over. On Thursday, shares closed up 1% to $44.53.